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3 2015 Electronic Accounts Payable Benchmark Survey Results Program Profiles by Organization Type and Size Richard J. Palmer Professor of Accounting Southeast Missouri State University Mahendra Gupta Professor of Accounting and Management Washington University in St. Louis July , RPMG Research Corporation. No part of this manuscript may be duplicated, reproduced, or quoted without the express written permission of Richard J. Palmer and Mahendra Gupta. To request permission, contact Richard Palmer by phone ( ) or

4 Preface We are pleased to present the 2015 Electronic Accounts Payable (EAP) Benchmark Survey Results. The report is based on data and analysis from over 800 EAP-using organizations across North America to identify and understand market trends and the factors that contribute to or detract from the use of and benefits associated with EAP (dynamically-adjustable cardless accounts used by organizations to pay for invoiced goods and services). Our analysis of the survey data is divided into three separate documents to assist the reader in finding the desired information in the most convenient manner, as follows: Market Trends and Best Practice Program Choices (the Main report) o Analyses and highlights of current trends in EAP use. o In-depth examination of factors critical to the success of EAP programs. o Identification of future trends and growth opportunities for EAP use. Program Profiles by Organization Type and Size o Benchmark data to evaluate EAP programs, broken down within corporate (by size and industry) and government and not-for-profit sectors (states and state agencies, city and county governments, colleges and universities, schools, and not-for-profits). The Provider s Role in EAP Program Success o An examination of customer satisfaction with and importance of EAP provider activities (across economic, service and support, reporting, and integration factors) and how it affects EAP program performance. A Table of Contents for the current report, as well as a Quick Guide to the Reports, which provides chapter content for the other reports, can be found on the next two pages. Financial institutions began marketing EAP accounts around Overall, the growth of EAP has been consistently strong in both good and poor economic conditions. However, the patterns of EAP use and benefits received by EAP-using organizations still vary widely. While many organizations have taken steps to advance their use of EAP to the next level, some organizations lag behind. This Report examines the spending norms and program choices being made by different types of organizations to derive the greatest benefit from EAP. We want to express our sincere thanks to the organizations and providers that participated in the Survey and offered their valuable input. We hope that the unselfish commitment of their time results in more efficient means to acquire and pay for goods in the marketplace. Richard J. Palmer Southeast Missouri State University Mahendra Gupta Washington University in St. Louis 2015 Electronic Accounts Payable Benchmark Survey Results Preface 4

5 Table of Contents Below is a listing of the chapters included in this Report. Click on a chapter title to jump to that page. To return to the Table of Contents, click the link in the lower left corner of any page. Chapter Title Page # i Preface ii Table of Contents iii A Quick Guide to the Reports iv Executive Summary INTRODUCTION 01 Introduction, Definitions, and Description of Sample PROGRAM PROFILES 02 Fortune 500-Size Large Market Middle Market States and State City and County Colleges and Universities School Districts Not-for-Profit Organizations Small Organizations ACKNOWLEDGEMENTS AND APPENDICES Acknowledgements About the Authors Outline to the Appendices Appendix A: Benchmark Statistics by Organization Type Appendix B: Benchmark Statistics by Industry Electronic Accounts Payable Benchmark Survey Results Table of Contents 5

6 A Quick Guide to the Reports The analysis of the 2015 Electronic Accounts Payable Benchmark Survey is broken into three separate reports to help the reader find the information they desire in the most expeditious manner. The three reports are entitled: Main Report: Market Trends and Best Practice Program Choices Report #2: Program Profiles by Organization Type and Size Report #3: The Provider s Role in EAP Program Success The content of Report #2 is the subject of this document. Information on where analyses may be found in the other reports is identified below. Main Report: Market Trends and Best Practice Program Choices Title Chapter Introduction, Definitions, and Description of Sample 1 EAP Goals and Comparative Advantage 2 EAP Spending Norms 3 EAP Market Size and Spending Growth 4 EAP Benefits 5 EAP Growth Potential 6 Connecting with Suppliers 7 Supplier Acceptance: Drivers and Impact 8 Best Practices 9-15 Mechanics of EAP and Integration with Organizational Information Systems 16 EAP Governance and Risk Management 17 EAP and Plastic Purchasing Cards: Integration and Advancement 18 Internal and External Fraud 19 Differences by Type of EAP Used App. A Report #3: The Provider s Role in Electronic Accounts Payable Success Title Chapter Introduction, Definitions, and Description of Sample 1 Trends in Customer Satisfaction: Economics 2 Trends in Customer Satisfaction: Customer Service and Support 3 Trends in Customer Satisfaction: Data Integration and Reporting 4 Customer Satisfaction and EAP Program Performance 5 Customer Satisfaction and Switching 6 EAP Acceptance by EAP Users Electronic Accounts Payable Benchmark Survey Results A Quick Guide to the Reports 6

7 Executive Summary In December 2014, a 40-page web-based 2015 Electronic Accounts Payable Benchmark Survey was released to 3,970 separate organizations that were customers of one of nineteen major issuers (including Bank of America Merrill Lynch, BMO, Bank of the West, BBVA Compass, Citibank, Comdata, Comerica, Commerce Bank, Electronic Funds Source, Fifth Third Bank, J.P. Morgan Chase, PNC Bank, Scotiabank, SunTrust, UMB, U.S. Bank, Wells Fargo, WEX, and Zions Bank) or members of the National Association of Purchasing Card Professionals and the National Institute of al Purchasing. Eight hundred and seventy responses were received, resulting in a response rate of 22%. All major EAP providing brands (American Express, MasterCard, and Visa) are represented in the survey response. Electronic Accounts Payable (hereafter EAP ) is a relatively new application of card technology for commercial use. This survey defined EAP as non-plastic p- card accounts used to pay for goods and services after an invoice has been received for those goods or services. For purposes of this survey, there are two models of EAP implementation---push payments and pull payments. Within the pull model, EAP has three major variations. Specifically, EAP can differ based on whether or not the virtual card number is constant or if the card number (and its associated credit line) is created specifically for a single transaction and then retired (e.g., a single-use account). Within the variation in which the card number is constant, a further distinction can be made regarding the identity of the party (buyer or seller) that will maintain possession of the card number. The second model of EAP implementation is referred to as straight-through, push, or buyer-initiated payments (BIP). This payment option entails a card account that the buying organization charges on behalf of the vendor, resulting in funds being deposited (pushed) directly into the vendor s bank account Electronic Accounts Payable Benchmark Survey Results Executive Summary 7

8 Introduction to EAP Program Profiles Fortune 500-Size make up the largest portion (40%) of total North American EAP spending, followed by Not-for-Profit Organizations (27%), Large Market (14%) and Middle Market (6%) corporations, Colleges and Universities (6%), School Districts (3%), City and County s (2%), and Federal and State (2%). Fortune 500-Size Fortune 500-Size respondents average $7.6 million in EAP spending per month with an average transaction amount of $4,928. Average monthly EAP spending per employee is currently $219. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 76% of Fortune 500-Size corporations report an increase and 10% no change in EAP spending. $7.6 Million Average monthly EAP spending for Fortune 500-size corporations Going forward, 80% of Fortune 500-Size corporations expect an increase and 12% no change in EAP spending by 2019, with an average increase of 88% expected over 2014 base year spending (an average annual rate of 17.6%). The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier), with two out of every three respondents utilizing this method. All of the Fortune 500-Size respondents had engaged in an effort to enlist suppliers for EAP acceptance, but only 19% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. Fortune 500-Size companies pay (on average) the highest number of suppliers with EAP, most likely to have engaged in an effort to enlist suppliers for EAP acceptance, and most likely to have changed payment terms to promote EAP acceptance of all of the segments analyzed in this report. Fortune 500-Size companies are the most likely to have a payment strategy which calls for different payment methods under different conditions of all of the segments analyzed in this report. Fortune 100-Size respondents currently average $11 million per month in EAP spending, with an average transaction of $4,146. Compared to the overall Fortune 500-size segment, the Fortune 100-Size group has 46% higher monthly spending, a higher percentage of transactions paid with EAP, and older EAP programs (on average) Electronic Accounts Payable Benchmark Survey Results Executive Summary 8

9 Large Market Large Market respondents average $1.5 million in EAP spending per month with an average transaction amount of $4,466. Average monthly EAP spending per employee is currently $319. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 66% of Large Market corporations reported an increase and 28% no change in EAP spending. Going forward, 78% of Large Market corporations expect an increase and 10% no change in EAP spending by 2019, with an average increase of 65% expected over 2014 base year spending (an average annual rate of 12.9%). $4,466 Average EAP transaction amount for Large Market corporations The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 65% of respondents utilizing this method. Ninety-three percent of Large Market respondents have engaged in an effort to enlist suppliers for EAP acceptance, but only 19% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. Middle Market Middle Market respondents average $624,681 in EAP spending per month with an average transaction amount of $3,897. Average monthly EAP spending per employee is currently $820. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 74% of Middle Market corporations report an increase and 23% no change in EAP spending. Going forward, 81% of Middle Market corporations expect an increase and 17% no change in EAP spending by 2019, a response pattern that is the most optimistic of all of the segments analyzed in this report. An average increase of 75% is expected over the 2014 base year EAP spending (an average annual rate of 15.1%). The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 67% of respondents utilizing this method, and 58% using single-use accounts. Ninety-one percent of Middle Market respondents have engaged in an effort to enlist suppliers for EAP acceptance, and 24% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment Electronic Accounts Payable Benchmark Survey Results Executive Summary 9

10 States and State States (and provinces) and State average $1.3 million in EAP spending per month with an average transaction amount of $2,818. Average monthly EAP spending per employee is currently $106. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 65% of States and State report an increase and 30% no change in EAP spending. Going forward, 69% of States and State expect an increase and 25% no change in EAP spending by 2019, with an average increase of 89% expected over 2014 base year spending (an average annual rate of 17.8%). The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 79% of respondents utilizing this method. Ninety-one percent of States and State have engaged in an effort to enlist suppliers for EAP acceptance, and 21% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. City and County City and County respondents average $321,028 in EAP monthly spending with an average transaction amount of $3,239. Average monthly EAP spending per employee is currently $220. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 67% of Cities and Counties report an increase and 22% no change in EAP spending. 84% Of Cities and Counties use virtual accounts Going forward, 56% of City and County respondents expect an increase and 32% no change in EAP spending by 2019, a response pattern that is the least optimistic of all of the segments analyzed in this report. An average increase of 50% is expected over 2014 base year EAP spending (an average annual rate of 10%). The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 84% of respondents utilizing this method. Eighty-six percent of City and County respondents have engaged in an effort to enlist suppliers for EAP acceptance, and 23% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. City and County respondents pay (on average) the lowest number of suppliers with EAP (91) of all of the segments analyzed in this report Electronic Accounts Payable Benchmark Survey Results Executive Summary 10

11 Colleges and Universities Colleges and Universities average $980,764 in EAP spending per month with an average transaction amount of $2,014. Monthly EAP spending per employee is currently $138. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 53% of Colleges and Universities report an increase and 33% no change in EAP spending. Going forward, 63% of Colleges and Universities expect an increase and 26% no change in EAP spending by 2019, with an average increase of 64% expected over 2014 base year spending (an average annual rate of 12.7%). The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 83% of respondents utilizing this method. Eighty-two percent of College and University respondents have engaged in an effort to enlist suppliers for EAP acceptance, and 31% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. College and University respondents are most likely to have a plastic purchasing card program (97%) and least likely to have engaged in an effort to enlist suppliers for EAP acceptance (87%) of all of the segments analyzed in this report. School Districts School Districts average $337,294 in EAP spending per month with an average transaction amount of $3,434. Monthly EAP spending per employee is currently $94. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 76% of School Districts report an increase and 12% no change in EAP spending. $94 Monthly EAP spending per employee for School Districts Going forward, 62% of School Districts expect an increase and 29% no change in EAP spending by 2019, with an average increase of 51% expected over 2014 base year spending (an average annual rate of 10.2%). School Districts are the least likely to have a payment strategy which calls for different payment methods under different conditions of all of the segments analyzed in this report. Virtual accounts (65% of respondents) and single-use accounts (47%) are the most popular EAP configurations Electronic Accounts Payable Benchmark Survey Results Executive Summary 11

12 Eighty-three percent of School District respondents have engaged in an effort to enlist suppliers for EAP acceptance, and 45% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. Not-for-Profit Organizations Not-for-Profit organizations average $2.8 million in EAP spending per month with an average transaction amount of $4,327. Monthly EAP spending per employee is currently $420. All of these benchmark figures have increased in comparison to 2012 data. Between 2014 and 2015, 60% of Not-for-Profit organizations report an increase and 32% no change in EAP spending. Going forward, 74% of Not-for-Profit organizations expect an increase and 13% no change in EAP spending by 2019, with an average increase of 58% expected over 2014 base year spending (an average annual rate of 11.7%). Virtual accounts (66% of respondents) and single-use accounts (45%) are the most popular EAP configurations. Ninety-two percent of Not-for-Profit respondents have engaged in an effort to enlist suppliers for EAP acceptance, and 19% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. Victor Habit is the nursery of errors. Hugo 2015 Electronic Accounts Payable Benchmark Survey Results Executive Summary 12

13 Small Organizations Small Organizations average $30,387 in EAP spending per month with an average transaction amount of $2,186. Average monthly EAP spending per employee is currently $305. Single-use accounts (62% of respondents) and virtual accounts (54%) are the most popular EAP configurations. Between 2014 and 2015, 70% of Small Organizations report an increase and 20% no change in EAP spending. Going forward, 75% of Small Organizations expect an increase and 20% no change in EAP spending by 2019, with an average increase of 96% expected over 2014 base year spending (an average annual rate of 19.3%). In rating the importance of EAP program goals, Small Organizations, are more concerned (than other organizations) with improving cash flow (3.92 versus 3.51) and tracking of payments (4.25 versus 3.77), and less concerned with simplifying the payment process (3.58 versus 4.02) or consolidating spending data (2.50 versus 2.91). Average Small Organization implementation time for EAP is just over six months, which is half that of all other organizations (13 months). Seventy-five percent of Small Organizations have engaged in an effort to enlist suppliers for EAP acceptance. On average, Small Organization pay 32 suppliers with EAP, representing 29% of their supplier base. 6 Months Average time to full implementation of EAP program for Small Organizations Small Organizations are generally less satisfied than other organizations with the EAP provider relationship and product, but they also expect less. Small Organizations have lower negative satisfaction-importance gaps than the total sample for customer service and reporting Electronic Accounts Payable Benchmark Survey Results Executive Summary 13

14 Chapter 1 Introduction, Definitions, and Description of Sample In December 2014, a 40-page web-based 2015 Electronic Accounts Payable Benchmark Survey was delivered to 3,970 separate organizations that were customers of one of nineteen major issuers (including Bank of America Merrill Lynch, BMO, Bank of the West, BBVA Compass, Citibank, Comdata, Comerica, Commerce Bank, Electronic Funds Source, Fifth Third Bank, J.P. Morgan Chase, PNC Bank, Scotiabank, SunTrust, UMB, U.S. Bank, Wells Fargo, WEX, and Zions Bank or members of the National Association of Purchasing Card Professionals and the National Institute of al Purchasing. Eight hundred and seventy responses were received, resulting in a response rate of 22%. 1 All major EAP providing brands (American Express, MasterCard, and Visa) are represented in the survey response. 1 Occasionally, respondents may have given an incomplete response resulting in a different number of responses for different questions. Throughout this report, our analysis of any given question will be based on usable responses to each question. In addition, we have purged unusual outlier responses to specific questionnaire items when appropriate to facilitate a meaningful understanding of the data and made minor adjustments to 2012 data to match 2015 sample composition. Introduction, Definitions, 2015 Electronic Accounts Payable Benchmark Survey Results and Description of Sample 14

15 Defining Electronic Accounts Payable Electronic Accounts Payable (hereafter EAP ) is a relatively new application of card technology for commercial use. This survey defined EAP as non-plastic p-card accounts used to pay for goods and services after an invoice has been received for those goods or services. The essence of EAP is a dynamically-adjustable account, meaning that the available credit on a card account is adjusted to match a specific transaction to be charged to a card number. Hence, after the transaction is completed the available line of credit on the card is of little or no value. As shown in Exhibit 1, there are two models of EAP implementation, which we refer to as push and pull. The pull model is so named because suppliers are required to input transaction data in order to pull the transaction through to its conclusion. Within the pull model, EAP has three major variations. Specifically, EAP can differ based on whether or not the virtual card number is constant or if the card number (and its associated credit line) is created specifically for a single transaction and then retired (e.g., a single-use account). Within the variation in which the card number is constant, a further distinction can be made regarding the identity of the party (buyer or seller) that will maintain possession of the card number. Buyers and sellers tend to have preferences about where the card number is housed. In some cases, buyers prefer the seller to house the card number so that it does not have to be communicated with every purchase. In other cases, sellers do not want to house the number and take on the associated responsibility for its security. The second model of EAP implementation is referred to as straight-through, push, or buyer-initiated payments (BIP). This payment option entails a card account that the buying organization charges on behalf of the vendor, resulting in funds being deposited (pushed) directly into the vendor s bank account. Exhibit 1: EAP Models and Variations Introduction, Definitions, 2015 Electronic Accounts Payable Benchmark Survey Results and Description of Sample 15

16 Respondent Profile Exhibit 2 shows a breakdown of survey respondents by organizational type: 33% are Privately- Owned, 21% are Public, 15% are Not-for-Profit Organizations, 12% are City or County s, 9% are Colleges or Universities, 8% are School Districts, and 2% are Federal or State. Exhibit 2: Respondents by Organizational Type Exhibit 3 on the next page separates public and private corporations (which represent 54% of the total sample response as shown in Exhibit 2) into four size categories: 29% are Fortune 500-Size companies (annual sales revenue greater than or equal to $2 billion), 25% are Large Market companies (annual sales revenue greater than or equal to $500 million, but less than $2 billion), 39% are Middle Market companies (annual sales revenue greater than or equal to $25 million, but less than $500 million) and 7% are Small Market companies (annual sales revenue of less than $25 million). To minimize any potential for distortion due to the presence of smaller organizations in the sample, hereafter all figures and exhibits in this Report exclude Small Market corporations and government and not-for-profit entities with annual budgets below $25 million. Information about EAP use at these organizations is discussed in the chapter entitled Small Organizations. Introduction, Definitions, 2015 Electronic Accounts Payable Benchmark Survey Results and Description of Sample 16

17 Exhibit 3: Corporate Respondents by Size Fortune 500-Size Large Market Middle Market Small Market 29% 25% 39% 7% F o r t u n e 500 Corporate respondents represent a wide range of industries. Exhibit 4 breaks down the corporate respondents by industry using Standard Industrial Classification (SIC) codes. The Exhibit shows that the response pool is well-distributed across different industries. Manufacturing is the largest single industry segment (29%). No single SIC code within manufacturing dominates this category. Exhibit 4: Corporate Respondents by Industry Introduction, Definitions, 2015 Electronic Accounts Payable Benchmark Survey Results and Description of Sample 17

18 The sample composition is reflective of an emerging technology, with respondents reporting that they have been using EAP for (on average) three years and four months. Exhibit 5 breaks down the respondent base by the length of time that an EAP program has been in place. The Exhibit shows that 13% of respondent programs are less than one year old, 34% are between 1 and 2 years old, 24% are between 3 and 4 years old, and 29% are 5 or more years old. Exhibit 5: Age of EAP Program Connection to the 2012 Report Throughout this report, we will selectively make comparative references to a previous RPMG Research Corporation report--the 2012 Electronic Accounts Payable (EAP) Benchmark Survey Results. 2 The 2012 Results were obtained from a survey that targeted EAP users, but was not exclusive to EAP users. 2 Copies of this report are available at Introduction, Definitions, 2015 Electronic Accounts Payable Benchmark Survey Results and Description of Sample 18

19 Introduction to Program Profiles This report provides a presentation and analysis of Electronic Accounts Payable (EAP) spending and program management practices of different market segments. The segments discussed in this report will include: Fortune 500-Size, Large Market, and Middle Market ; States and State ; City and County s; Colleges and Universities; School Districts; and Not-for-Profit Organizations. In addition, we will examine the unique EAP programs of Small Organizations (defined as any organization with annual revenue or an annual budget below $25 million). For each segment, there will be a chapter that provides (a) monthly EAP spending norms, (b) the historical trend for EAP benchmarks, (c) the percentage of transactions currently paid with EAP (for various dollar ranges), (d) the percentage of respondents using each type of EAP payment (e.g., single-use accounts, virtual accounts, or buyer-initiated payments), (e) the past and future growth of EAP spending, and (f) some fundamental aspects of how EAP programs are being managed. Additional Analysis Appendix A at the end of this Report contains additional analysis of Fortune 500-Size, Large, and Middle Market, States and State, City and County s, Colleges and Universities, School Districts, and Not-for-Profit Organizations. In addition, Appendix B contains the same information as Appendix A, but is broken down by nine industry categories, as follows: (1) Agriculture, mining, and construction; (2) Finance, insurance, banking, and real estate; (3) Manufacturing; (4) Professional, scientific, and technical services; (5) Software and IT solutions; (6) Telecommunications, media, and entertainment; (7) Transportation, warehousing, and delivery services; (8) Utilities; and (9) Wholesale and retail trade. Introduction, Definitions, 2015 Electronic Accounts Payable Benchmark Survey Results and Description of Sample 19

20 EAP Spending by Market Segment In Chapter 4 of the Main Report (Market Trends and Best Practice Program Choices), current overall North American EAP market spending was estimated at $65 billion. Of that total, Exhibit 6 shows that Fortune 500-Size make up the largest portion (40%) of total market spending, followed by Not-for-Profit Organizations (27%), Large Market (14%) and Middle Market (6%), Colleges and Universities (6%), School Districts (3%), City and County s (2%), and Federal and State (2%). Exhibit 6: Current EAP Spending, by Market Segment* * Due to the nature of their size, Small Organizations make up less than one percent of the total market spending, and therefore have been excluded from this Exhibit. Conclusion A broad spectrum of organizations is represented in the final sample for analyses of EAP use in both Corporate and and Not-for-Profit segments. Though most EAP programs are relatively new, the respondent pool includes a diverse range of experience with EAP. Finally, respondent use of different EAP models creates an opportunity to gain additional insight into the unique nature of this payment technology. Introduction, Definitions, 2015 Electronic Accounts Payable Benchmark Survey Results and Description of Sample 20

21 Chapter 2 Fortune 500-Size EAP Spending Norms Exhibit 7 on the next page presents current EAP spending norms for Fortune 500-Size corporate respondents. The Exhibit shows that average monthly EAP account spending is $7.6 million at the beginning of 2015, up from $4 million at the beginning of Likewise, median monthly spending currently stands at $2.1 million, up from $1.2 million in The average EAP transaction amount for Fortune 500-Size respondents is $4,928 in 2015, nearly doubling since Average monthly spending per employee has also increased, going from $118 in 2012 to $219 in Average annual EAP spending as a percentage of sales revenue has also increased over the past three years. Finally, the Exhibit shows that Fortune 500-Size respondents have either increased or maintained their capture of transactions with EAP since Fortune 500-Size companies currently use EAP to pay for, on average, 17% of their $2,500 or less transactions, 22% of their $2,501 to $10,000 transactions, 22% of their $10,001 to $100,000 transactions, and 8% of their $100,001 to $1 million transactions Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 21

22 Exhibit 7: EAP Program Statistics, Fortune 500-Size, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 34,343 34,470 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $4,043,584 $7,564,988 Median monthly EAP spending $1,167,000 $2,114,794 Monthly spending per employee $118 $219 Spending per transaction $2,541 $4,928 Annual EAP spending as a percent of revenue/budget 0.54% 0.69% Percent of Transactions Paid with EAP Transactions of $2,500 or less 13% 17% Transactions between $2,501 and $10,000 17% 22% Transactions between $10,001 and $100,000 22% 22% Transactions between $100,001 and $1 Million N/A 8% Historical Trends at a Glance Exhibit 8 presents a graphic summary of the changes in Fortune 500-Size EAP program spending statistics since 2012, including overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 8: EAP Historical Trends Dashboard, Fortune 500-Size, 2012 to Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 22

23 Use of Different EAP Models Exhibit 9 breaks down the types of EAP models used by Fortune 500-Size corporations. The most popular option used is virtual accounts (maintained by the buyer or supplier) with 67% of respondents utilizing this method. Exhibit 9: Use of EAP Configurations, Fortune 500-Size EAP Configuration Percent of Respondents Using Virtual accounts* 67% Single-use accounts 42% Buyer-initiated payments 33% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 10, 76% of Fortune 500-Size corporations report EAP spending growth, 10% report no change, and 14% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 10: Type of Change in EAP Spending, Fortune 500-Size, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 23

24 Expectations for Future EAP Spending Looking forward, Exhibit 11(a) shows that 80% of programs expect an increase in EAP spending over the next five years, while 12% expect no change. As a rationale for the expected increase, the majority (75%) of Fortune 500-Size corporations cite efforts to target vendors. Exhibit 11(a): Type of Change Expected in EAP Spending, Fortune 500-Size, 2015 to 2019 Exhibit 11(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively, spending is expected to increase 88% by 2019 (or 17.6% per year on average). Exhibit 11(b): Projected Future Growth Rates for EAP Spending, Fortune 500-Size Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 15% % 48% % 88% Average Annual Rate Average annual change expected over next five years 16.6% 17.6% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 24

25 Program Management At a Glance Exhibit 12 displays a selection of program management statistics. The Exhibit shows that 92% of Fortune 500-Size respondents use plastic purchasing cards in addition to EAP. Eight percent of respondents have a payment strategy that calls for different payment methods under different conditions. Fortune 500-size corporations use EAP to pay for 39% of purchases in goods categories and 36% of purchases in service categories. The average time to full implementation for Fortune 500-Size EAP programs is 1.62 years. Respondents pay an average of 268 suppliers with EAP, representing 13% of their supplier base. All of the Fortune 500-size respondents engaged in an effort to enlist suppliers for EAP acceptance, but only 19% are satisfied or very satisfied with the level of supplier acceptance of EAP payment. In addition, the majority (65%) of respondents formally review and audit their EAP spending approval process, 60% have EAP provider insurance related to fraudulent spending, and 17% of EAP transactions (on average) are manually reconciled. Henry Coming together is a beginning. Keeping together is progress. Working together is success. Ford 2015 Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 25

26 Exhibit 12: EAP Program Management Statistics, Fortune 500-Size 2015 Organizational Statistics Percent that use plastic purchasing cards 92% Percent that have a payment strategy which calls for different payment methods under different conditions 80% Spending Expansion Goods purchased with EAP* 39% Services purchased with EAP^ 36% Time to full implementation (in years) 1.62 Supplier Acceptance Number of suppliers currently paid with EAP 268 Percent of supplier base paid with EAP 13% Percent that are satisfied or very satisfied with the level of supplier acceptance for EAP payment 19% Supplier Recruitment Percent that engaged in an effort to enlist suppliers for EAP acceptance 100% Percent that changed payment terms to promote EAP acceptance (e.g., has your organization pushed check payment back from 30 to 60 days or has payment by EAP been expedited in some way). 58% Spending Reconciliation Percentage of transactions that are manually reconciled 17% Risk Management Percent that formally review and audit EAP spending approval process 65% Percent that have EAP issuer-provided insurance related to fraudulent EAP spending 60% * As described in Chapter 6 (of the Main Report), we defined six categories of goods including: (1) office equipment and supplies; (2) computer and mobile hardware, software, and peripherals; (3) operating goods and supplies; (4) construction materials and capital assets; (5) inventory; and (6) infrastructure. For a complete description of the categories, see Chapter 6. The figure represents the percentage of those categories captured by Fortune 500-Size corporations. ^ As described in Chapter 6 (of the Main Report), we defined eight categories of services including: (1) contractual repair and maintenance; (2) mail and delivery of goods; (3) education and training; (4) professional services; (5) telecommunications and utilities; (6) media and advertising; (7) travel; and (8) other business services. For a complete description of the categories, see Chapter 6. The figure represents the percentage of those categories captured by Fortune 500-Size corporations Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 26

27 Fortune 100-Size Spending Norms Unlike our other corporate size categories, the Fortune 500-Size segment has no upper limit on the size of the respondents. Since companies in this segment can vary, we have broken off the upper end of this segment (or Fortune 100-Size ) for further analysis. This largest of the large group is a unique market and includes all companies with annual sales revenue of $20 billion or above. Exhibit 13 presents the EAP program performance statistics of Fortune 100-Size corporations. The Exhibit shows that these companies average $11 million in monthly EAP spending, supported by a $4,146 average transaction amount, both increased from The average monthly spending per employee is $131, up modestly from $95 in Compared to the overall Fortune 500-size segment, Fortune 100-size corporations report: Higher monthly EAP spending ($11 versus $7.6 million), A lower average transaction amount ($4,146 versus $4,928), Older average program age (5.05 versus 4.15 years), Higher capture of transactions paid with EAP for $2,500 or less (20% versus 17%) and $2,501 to $10,000 (26% versus 22%). Exhibit 13: EAP Program Statistics, Fortune 100-Size, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 91,576 84,232 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $8,712,829 $11,023,140 Median monthly EAP spending $3,000,000 $5,250,000 Monthly spending per employee $95 $131 Spending per transaction $2,578 $4,146 Annual EAP spending as a percent of revenue/budget 0.50% 0.47% Percent of Transactions Paid with EAP Transactions of $2,500 or less 17% 20% Transactions between $2,501 and $10,000 20% 26% Transactions between $10,001 and $100,000 24% 24% Transactions between $100,001 and $1 Million N/A 6% 2015 Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 27

28 Conclusion Fortune 500-Size respondents average $7.6 million in EAP spending per month with an average transaction of $4,928. Monthly EAP spending per employee is currently $219. All of these benchmarks represent increases from corresponding 2012 data. The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with two out of every three respondents utilizing this method. All Fortune 500-size respondents engaged in an effort to enlist suppliers for EAP acceptance, but only 19% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. Fortune 100-size respondents currently average $11 million per month in EAP spending, with an average transaction of $4,146. Compared to the overall Fortune 500-size segment, the Fortune 100-size group has 46% higher monthly spending, a higher percentage of transactions paid with EAP, and (on average) older EAP programs. Cornelius Planning without action is futile, action without planning is fatal. Fitchner 2015 Electronic Accounts Payable Benchmark Survey Results Fortune 500-Size 28

29 Chapter 3 Large Market EAP Spending Norms Exhibit 14 presents current EAP spending norms for Large Market corporate respondents. The Exhibit shows that average monthly EAP account spending is $1.5 million at the beginning of 2015, up from $825,952 at the beginning of Likewise, median monthly spending currently stands at $900,000, up from $480,000 in The average EAP transaction amount for Large Market respondents is $4,466 in 2015, an increase from Average monthly spending per employee has also increased, going from $186 in 2012 to $319 in Average annual EAP spending as a percentage of sales revenue also increased from 1.07% in 2012 to 1.53% in Finally, the Exhibit shows that Large Market respondents currently use EAP to pay for, on average, 14% of their $2,500 or less transactions, 18% of their $2,501 to $10,000 transactions, 17% of their $10,001 to $100,000 transactions, and 9% of their $100,001 to $1 million transactions. EAP transaction capture in all spending categories (that were included in our 2012 report) has remained steady or increased since Electronic Accounts Payable Benchmark Survey Results Large Market 29

30 Exhibit 14: EAP Program Statistics, Large Market, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 4,430 4,791 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $825,952 $1,527,719 Median monthly EAP spending $480,000 $900,000 Monthly spending per employee $186 $319 Spending per-transaction $2,945 $4,466 Annual EAP spending as a percentage of revenue/budget 1.07% 1.53% Transaction Capture Transactions of $2,500 or less paid with EAP 11% 14% Transactions of $2,501 to $10,000 paid with EAP 15% 18% Transactions of $10,001 to $100,000 paid with EAP 17% 17% Transactions of $100,001 to $1 Million paid with EAP N/A 9% Historical Trends at a Glance Exhibit 15 presents a graphic summary of the changes in the Large Market EAP spending statistics since 2012, including overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 15: EAP Historical Trends Dashboard, Large Market, 2012 to Electronic Accounts Payable Benchmark Survey Results Large Market 30

31 Use of Different EAP Models Exhibit 16 breaks down the types of EAP models used by Large Market corporations. The most popular option used is virtual accounts (maintained by the buyer or supplier) with 65% of respondents utilizing this method. Exhibit 16: Use of EAP Configurations, Large Market EAP Configuration Percent of Respondents Using Virtual accounts* 65% Single-use accounts 53% Buyer-initiated payments 30% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 17, 66% of Large Market corporations report EAP spending growth, 28% report no change, and 6% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 17: Type of Change in EAP Spending, Large Market, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results Large Market 31

32 Expectations for Future EAP Spending Looking forward, Exhibit 18(a) shows that the majority of programs (78%) expect an increase in EAP spending over the next five years, while 10% expect no change. As a rationale for the expected increase, the majority (71%) of Large Market corporations cite efforts to target vendors, and improvements in supplier acceptance of EAP (51%). Exhibit 18(a): Type of Change Expected in EAP Spending, Large Market, 2015 to 2019 Exhibit 18(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively, spending is expected to increase 65% by 2019 (or an average of 12.9% per year). Exhibit 18(b): Projected Future Growth Rates for EAP Spending, Large Market Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 12% % 37% % 65% Average Annual Rate Average annual change expected over next five years 12.2% 12.9% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results Large Market 32

33 Program Management At a Glance Exhibit 19 displays a selection of program management statistics. The Exhibit shows that 93% of Large Market respondents use plastic purchasing cards in addition to EAP. Seventy-two percent of respondents have a payment strategy that calls for different payment methods under different conditions. Large Market corporations use EAP to pay for 54% of purchases in goods categories and 58% of purchases in service categories. The average time to full implementation for Large Market EAP programs is 1.03 years. Respondents pay an average of 251 suppliers with EAP, representing 19% of their supplier base. Ninety-three percent of Large Market respondents engaged in an effort to enlist suppliers for EAP acceptance, but only 19% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. In addition, the majority (57%) of respondents formally review and audit their EAP spending approval process, 35% have EAP provider insurance related to fraudulent spending, and 16% of EAP transactions (on average) are manually reconciled.. Babe It s hard to beat a person who never gives up. Ruth 2015 Electronic Accounts Payable Benchmark Survey Results Large Market 33

34 Exhibit 19: EAP Program Management Statistics, Large Market 2015 Organizational Statistics Percent that use plastic purchasing cards 93% Percent that have a payment strategy which calls for different payment methods under different conditions 72% Spending Expansion Goods purchased with EAP* 54% Services purchased with EAP^ 58% Time to full implementation (in years) 1.03 Supplier Acceptance Number of suppliers currently paid with EAP 251 Percent of supplier base paid with EAP 19% Percent that are satisfied or very satisfied with the level of supplier acceptance for EAP payment 19% Supplier Recruitment Percent that engaged in an effort to enlist suppliers for EAP acceptance 93% Percent that changed payment terms to promote EAP acceptance (e.g., has your organization pushed check payment back from 30 to 60 days or has payment by EAP been expedited in some way). 28% Spending Reconciliation Percentage of transactions that are manually reconciled 16% Risk Management Percent that formally review and audit EAP spending approval process 57% Percent that have EAP issuer-provided insurance related to fraudulent EAP spending 35% * See description of the goods category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by Large Market corporations. ^ See description of the services category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by Large Market corporations. Conclusion Large Market respondents average $1.5 million in EAP spending per month with an average transaction of $4,466. Monthly EAP spending per employee is currently $319. All of these benchmarks represent increases from corresponding 2012 data. The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 65% of respondents utilizing this method. Ninety-three percent of Large Market respondents engaged in an effort to enlist suppliers for EAP acceptance, and 19% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment Electronic Accounts Payable Benchmark Survey Results Large Market 34

35 Chapter 4 Middle Market EAP Spending Norms Exhibit 20 presents current EAP spending norms for Middle Market corporate respondents. The Exhibit shows that average monthly EAP account spending is $624,681 at the beginning of 2015, up from $339,618 at the beginning of Likewise, median monthly spending currently stands at $187,500, up from $95,000 in The average EAP transaction amount for Middle Market respondents is $3,897 in 2015, an increase from Average monthly spending per employee has increased, going from $472 in 2012 to $820 in And, average annual EAP spending as a percentage of sales revenue has also increased from 2.55% in 2012 to 3.61% in Finally, the Exhibit shows that Middle Market respondents currently use EAP to pay for, on average, 18% of their $2,500 or less transactions, 21% of their $2,501 to $10,000 transactions, 17% of their $10,001 to $100,000 transactions, and 8% of their $100,001 to $1 million transactions. EAP transaction capture in all spending categories (that were included in our 2012 report) has remained steady or increased since Electronic Accounts Payable Benchmark Survey Results Middle Market 35

36 Exhibit 20: EAP Program Statistics, Middle Market, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees Age of program (in years) EAP Spending Metrics Average monthly EAP spending $339,618 $624,681 Median monthly EAP spending $95,000 $187,500 Monthly spending per employee $472 $820 Spending per transaction $2,389 $3,897 Annual EAP spending as a percent of revenue/budget 2.55% 3.61% Percent of Transactions Paid with EAP Transactions of $2,500 or less 14% 18% Transactions between $2,501 and $10,000 17% 21% Transactions between $10,001 and $100,000 17% 17% Transactions between $100,001 and $1 Million N/A 8% Historical Trends at a Glance Exhibit 21 presents a graphic summary of the changes in the Middle Market EAP spending statistics since 2012, including overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 21: EAP Historical Trends Dashboard, Middle Market, 2012 to Electronic Accounts Payable Benchmark Survey Results Middle Market 36

37 Use of Different EAP Models Exhibit 22 breaks down the types of EAP models used by Middle Market corporations. Both virtual accounts (maintained by the buyer or supplier) and single-use accounts are popular options, in use by 67% and 58% of respondents, respectively. Exhibit 22: Use of EAP Configurations, Middle Market EAP Configuration Percent of Respondents Using Virtual accounts* 67% Single-use accounts 58% Buyer-initiated payments 23% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 23, 74% of Middle Market corporations report EAP spending growth, 23% report no change, and 3% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 23: Type of Change in EAP Spending, Middle Market, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results Middle Market 37

38 Expectations for Future EAP Spending Looking forward, Exhibit 24(a) shows that 81% of programs expect an increase in EAP spending over the next five years, while 17% expect no change. As a rationale for the expected increase, the majority (69%) of Middle Market corporations cite efforts to target vendors. Exhibit 24(a): Type of Change Expected in EAP Spending, Middle Market, 2015 to 2019 Exhibit 24(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively speaking, spending is expected to increase 75% by 2019 (or an average of 15.1% per year). Exhibit 24(b): Projected Future Growth Rates for EAP Spending, Middle Market Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 14% % 41% % 75% Average Annual Rate Average annual change expected over next five years 14.2% 15.1% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results Middle Market 38

39 Program Management At a Glance Exhibit 25 displays a selection of program management statistics. The Exhibit shows that 87% of Middle Market respondents use plastic purchasing cards in addition to EAP. Sixty-five percent of respondents have a payment strategy that calls for different payment methods under different conditions. Middle Market corporations use EAP to pay for 43% of good and 28% of service categories. The average time to full implementation for Middle Market EAP programs is 0.87 years. Respondents pay an average of 157 suppliers with EAP, representing (on average) 14% of their supplier base. Ninety-one percent of Middle Market respondents engaged in an effort to enlist suppliers for EAP acceptance, but only 24% are satisfied or very satisfied with the level of supplier acceptance of EAP payment. In addition, the majority (53%) of respondents formally review and audit their EAP spending approval process, 28% have EAP provider insurance related to fraudulent spending, and 29% of EAP transactions (on average) are manually reconciled.. Dave If I had to identify, in one word, the reason why the human race has not achieved, and never will achieve, its full potential, that word would be meetings. Berry 2015 Electronic Accounts Payable Benchmark Survey Results Middle Market 39

40 Exhibit 25: EAP Program Management Statistics, Middle Market 2015 Organizational Statistics Percent that use plastic purchasing cards 87% Percent that have a payment strategy which calls for different payment methods under different conditions 65% Spending Expansion Goods purchased with EAP* 43% Services purchased with EAP^ 28% Time to full implementation (in years) 0.87 Supplier Acceptance Number of suppliers currently paid with EAP 157 Percent of supplier base paid with EAP 14% Percent that are satisfied or very satisfied with the level of supplier acceptance for EAP payment 24% Supplier Recruitment Percent that engaged in an effort to enlist suppliers for EAP acceptance 91% Percent that changed payment terms to promote EAP acceptance (e.g., has your organization pushed check payment back from 30 to 60 days or has payment by EAP been expedited in some way). 29% Spending Reconciliation Percentage of transactions that are manually reconciled 29% Risk Management Percent that formally review and audit EAP spending approval process 53% Percent that have EAP issuer-provided insurance related to fraudulent EAP spending 28% * See description of the goods category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by Middle Market corporations. ^ See description of the services category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by Middle Market corporations Electronic Accounts Payable Benchmark Survey Results Middle Market 40

41 Conclusion Middle Market respondents average $624,681 in EAP spending per month with an average transaction amount of $3,897. Average monthly EAP spending per employee is currently $820. All of these benchmarks represent increases from corresponding 2012 data. The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 67% of respondents utilizing this method, and 58% using single-use accounts. Ninety-one percent of Middle Market respondents engaged in an effort to enlist suppliers for EAP acceptance, with the typical respondent paying (on average) 14% of its supplier base with EAP. Warren Risk comes from not knowing what you are doing. Buffett 2015 Electronic Accounts Payable Benchmark Survey Results Middle Market 41

42 Chapter 5 States and State EAP Spending Norms Exhibit 26 presents current EAP spending norms for States (and Provinces of Canada) and agencies thereof. 3 The Exhibit shows that average monthly EAP account spending is $1.3 million at the beginning of 2015, up from $680,620 at the beginning of Likewise, median monthly spending currently stands at $444,000, up from $325,000 in The average EAP transaction amount for these respondents is $2,818 in 2015, an increase from Average monthly spending per employee has increased, going from $59 in 2012 to $106 in And, average annual EAP spending as a percentage of budget has also increased from 0.27% in 2012 to 0.38% in Finally, the Exhibit shows that States and State Agency respondents currently use EAP to pay for, on average, 15% of their $2,500 or less transactions, 28% of their $2,501 to $10,000 transactions, 26% of their $10,001 to $100,000 transactions, and 5% of their $100,001 to $1 million transactions. EAP transaction capture in all spending categories (that were included in our 2012 report) has increased since Hereafter, this report will refer to these organizations as Sates and State Electronic Accounts Payable Benchmark Survey Results States and State 42

43 Exhibit 26: EAP Program Statistics, States and State, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 11,554 12,398 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $680,620 $1,310,804 Median monthly EAP spending $325,000 $444,000 Monthly spending per employee $59 $106 Spending per transaction $1,320 $2,818 Annual EAP spending as a percent of revenue/budget 0.27% 0.38% Percent of Transactions Paid with EAP Transactions of $2,500 or less 11% 15% Transactions between $2,501 and $10,000 25% 28% Transactions between $10,001 and $100,000 25% 26% Transactions between $100,001 and $1 Million N/A 5% Historical Trends at a Glance Exhibit 27 presents a graphic summary of the changes in State and State Agency EAP spending statistics since 2012, including overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 27: EAP Historical Trends Dashboard, States and State, 2012 to Electronic Accounts Payable Benchmark Survey Results States and State 43

44 Use of Different EAP Models Exhibit 28 breaks down the types of EAP models used by state governments and agencies. The most popular option is virtual accounts (maintained by the buyer or supplier), in use by 79% of respondents. Exhibit 28: Use of EAP Configurations, States and State EAP Configuration Percent of Respondents Using Virtual accounts* 79% Single-use accounts 36% Buyer-initiated payments 21% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 29, 65% of State and State agency respondents report EAP spending growth, 30% report no change, and 5% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 29: Type of Change in EAP Spending, States and State, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results States and State 44

45 Expectations for Future EAP Spending Looking forward, Exhibit 30(a) shows that 69% of programs expect an increase in EAP spending over the next five years, while 25% expect no change. As a rationale for the expected increase, all of the states and state agencies cite efforts to target vendors. Exhibit 30(a): Type of Change Expected in EAP Spending, States and State, 2015 to 2019 Exhibit 30(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively, spending is expected to increase 89% by 2019 (or an average of 17.8% per year). Exhibit 30(b): Projected Future Growth Rates for EAP Spending, States and State Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 15% % 43% % 89% Average Annual Rate Average annual change expected over next five years 16.8% 17.8% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results States and State 45

46 Program Management At a Glance Exhibit 31 displays a selection of program management statistics. The Exhibit shows that 86% of States and State use plastic purchasing cards in addition to EAP. Fifty-six percent of respondents have a payment strategy that calls for different payment methods under different conditions. States and State Agency respondents use EAP to pay for 50% of good and 56% of service categories. The average time to full implementation for States and State Agency EAP programs is 1.25 years. Respondents pay an average of 169 suppliers with EAP, representing (on average) 22% of their supplier base. Ninety-one percent of States and State Agency engaged in an effort to enlist suppliers for EAP acceptance, and 21% are satisfied or very satisfied with the level of supplier acceptance of EAP. In addition, the majority (53%) of respondents formally review and audit their EAP spending approval process, 33% have EAP provider insurance related to fraudulent spending, and 12% of EAP transactions (on average) are manually reconciled. Michael I have failed over and over again in my life and this is why I succeed. Jordan 2015 Electronic Accounts Payable Benchmark Survey Results States and State 46

47 Exhibit 31: EAP Program Management Statistics, States and State 2015 Organizational Statistics Percent that use plastic purchasing cards 86% Percent that have a payment strategy which calls for different payment methods under different conditions 56% Spending Expansion Goods purchased with EAP* 50% Services purchased with EAP^ 56% Time to full implementation (in years) 1.25 Supplier Acceptance Number of suppliers currently paid with EAP 169 Percent of supplier base paid with EAP 22% Percent that are satisfied or very satisfied with the level of supplier acceptance for EAP payment 21% Supplier Recruitment Percent that engaged in an effort to enlist suppliers for EAP acceptance 91% Percent that changed payment terms to promote EAP acceptance (e.g., has your organization pushed check payment back from 30 to 60 days or has payment by EAP been expedited in some way). 24% Spending Reconciliation Percentage of transactions that are manually reconciled 12% Risk Management Percent that formally review and audit EAP spending approval process 53% Percent that have EAP issuer-provided insurance related to fraudulent EAP spending 33% * See description of the goods category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by State and State Agency respondents. ^ See description of the services category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by State and State Agency respondents. Conclusion States and State average $1.3 million in EAP spending per month with an average transaction of $2,818. Monthly EAP spending per employee is currently $106. All of these benchmarks represent increases from corresponding 2012 data. The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 79% of respondents utilizing this method. Ninety-one percent of States and State Agency respondents engaged in an effort to enlist suppliers for EAP acceptance and the typical State or State Agency respondent pays (on average) 22% of its supplier base with EAP Electronic Accounts Payable Benchmark Survey Results States and State 47

48 Chapter 6 City and County EAP Spending Norms Exhibit 32 presents current EAP spending norms for City and County respondents. The Exhibit shows that average monthly EAP account spending is $321,028 at the beginning of 2015, up from $161,031 at the beginning of Likewise, median monthly spending currently stands at $100,000, up from $35,850 in The average EAP transaction amount for these respondents is $3,239 in 2015, an increase from Average monthly spending per employee has increased, going from $123 in 2012 to $220 in And, average annual EAP spending as a percentage of budget has also increased from 1.08% in 2012 to 1.27% in Finally, the Exhibit shows that City and County respondents currently use EAP to pay for, on average, 13% of their $2,500 or less transactions, 17% of their $2,501 to $10,000 transactions, 15% of their $10,001 to $100,000 transactions, and 7% of their $100,001 to $1 million transactions. EAP transaction capture in all spending categories (that were included in our 2012 report) has increased since Electronic Accounts Payable Benchmark Survey Results Cities and Counties 48

49 Exhibit 32: EAP Program Statistics, Cities and Counties, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 1,305 1,457 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $161,031 $321,028 Median monthly EAP spending $35,850 $100,000 Monthly spending per employee $123 $220 Spending per transaction $2,291 $3,239 Annual EAP spending as a percent of revenue/budget 1.08% 1.27% Percent of Transactions Paid with EAP Transactions of $2,500 or less 8% 13% Transactions between $2,501 and $10,000 15% 17% Transactions between $10,001 and $100,000 13% 15% Transactions between $100,001 and $1 Million N/A 7% Historical Trends at a Glance Exhibit 33 presents a graphic summary of the trends in the City and County EAP program profile since Specifically, the trends in overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 33: EAP Historical Trends Dashboard, Cities and Counties, 2012 to Electronic Accounts Payable Benchmark Survey Results Cities and Counties 49

50 Use of Different EAP Models Exhibit 34 breaks down the types of EAP models used by Cities and Counties. The most popular option is virtual accounts (maintained by the buyer or supplier), in use by 84% of respondents. Exhibit 34: Use of EAP Configurations, Cities and Counties EAP Configuration Percent of Respondents Using Virtual accounts* 84% Single-use accounts 26% Buyer-initiated payments 16% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 35, 67% of City and County respondents report EAP spending growth, 22% report no change, and 11% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 35: Type of Change in EAP Spending, Cities and Counties, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results Cities and Counties 50

51 Expectations for Future EAP Spending Looking forward, Exhibit 36(a) shows that 56% of programs expect an increase in EAP spending over the next five years, while 32% expect no change. As a rationale for the expected increase, 80% of the City and County programs cite efforts to target vendors. Exhibit 36(a): Type of Change Expected in EAP Spending, Cities and Counties, 2015 to 2019 Exhibit 36(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively, spending is expected to increase 50% by 2019 (or an average of 10% per year). Exhibit 36(b): Projected Future Growth Rates for EAP Spending, Cities and Counties Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 9% % 29% % 50% Average Annual Rate Average annual change expected over next five years 9.4% 10.0% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results Cities and Counties 51

52 Program Management At a Glance Exhibit 37 displays a selection of program management statistics. The Exhibit shows that 95% of City and County respondents use plastic purchasing cards in addition to EAP. Half of the respondents have a payment strategy that calls for different payment methods under different conditions. City and County respondents use EAP to pay for 50% of good and 34% of service categories. The average time to full implementation for City and County EAP programs is just over one year. Respondents pay an average of 91 suppliers with EAP, representing (on average) 13% of their supplier base. Eighty-six percent of City and County respondents engaged in an effort to enlist suppliers for EAP acceptance, and 23% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. In addition, the majority (87%) of respondents formally review and audit their EAP spending approval process, 57% have EAP provider insurance related to fraudulent spending, and 36% of EAP transactions (on average) are manually reconciled. Peter The only things that evolve by themselves in an organization are disorder, friction, and malperformance. Drucker 2015 Electronic Accounts Payable Benchmark Survey Results Cities and Counties 52

53 Exhibit 37: EAP Program Management Statistics, Cities and Counties 2015 Organizational Statistics Percent that use plastic purchasing cards 95% Percent that have a payment strategy which calls for different payment methods under different conditions 50% Spending Expansion Goods purchased with EAP* 50% Services purchased with EAP^ 34% Time to full implementation (in years) 1.04 Supplier Acceptance Number of suppliers currently paid with EAP 91 Percent of supplier base paid with EAP 13% Percent that are satisfied or very satisfied with the level of supplier acceptance for EAP payment 23% Supplier Recruitment Percent that engaged in an effort to enlist suppliers for EAP acceptance 86% Percent that changed payment terms to promote EAP acceptance (e.g., has your organization pushed check payment back from 30 to 60 days or has payment by EAP been expedited in some way). 23% Spending Reconciliation Percentage of transactions that are manually reconciled 36% Risk Management Percent that formally review and audit EAP spending approval process 87% Percent that have EAP issuer-provided insurance related to fraudulent EAP spending 57% * See description of the goods category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by City and County respondents. ^ See description of the services category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by City and County respondents. Conclusion Cities and Counties average $321,028 in EAP spending per month, with an average transaction of $3,239. Average monthly EAP spending per employee is currently $220. All of these benchmarks are up from comparable 2012 figures. The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 84% of respondents utilizing this method. Eighty-six percent of City and County respondents engaged in an effort to enlist suppliers for EAP acceptance, and 23% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment Electronic Accounts Payable Benchmark Survey Results Cities and Counties 53

54 Chapter 7 Colleges and Universities EAP Spending Norms Exhibit 38 presents current EAP spending norms for Colleges and Universities. The Exhibit shows that average monthly EAP account spending is $980,764 at the beginning of 2015, up from $536,887 at the beginning of Likewise, median monthly spending currently stands at $375,000, up from $180,000 in The average EAP transaction amount for these respondents is $2,014 in 2015, an increase from Average monthly spending per employee has increased, going from $76 in 2012 to $138 in And, average annual EAP spending as a percentage of budget has also increased from 0.71% in 2012 to 1.00% in Finally, the Exhibit shows that College and University respondents currently use EAP to pay for, on average, 9% of their $2,500 or less transactions, 14% of their $2,501 to $10,000 transactions, 10% of their $10,001 to $100,000 transactions, and 5% of their $100,001 to $1 million transactions. EAP transaction capture in all spending categories (that were included in our 2012 report) has increased since Electronic Accounts Payable Benchmark Survey Results Colleges and Universities 54

55 Exhibit 38: EAP Program Statistics, Colleges and Universities, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 7,051 7,115 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $536,887 $980,764 Median monthly EAP spending $180,000 $375,000 Monthly spending per employee $76 $138 Spending per transaction $1,198 $2,014 Annual EAP spending as a percent of revenue/budget 0.71% 1.00% Percent of Transactions Paid with EAP Transactions of $2,500 or less 5% 9% Transactions between $2,501 and $10,000 9% 14% Transactions between $10,001 and $100,000 7% 10% Transactions between $100,001 and $1 Million N/A 5% Historical Trends at a Glance Exhibit 39 presents a graphic summary of the changes in College and University EAP spending statistics since 2012, including overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 39: EAP Historical Trends Dashboard, Colleges and Universities, 2012 to Electronic Accounts Payable Benchmark Survey Results Colleges and Universities 55

56 Use of Different EAP Models Exhibit 40 breaks down the types of EAP models used by Colleges and Universities. The most popular option is virtual accounts (maintained by the buyer or supplier), in use by 83% of respondents. Exhibit 40: Use of EAP Configurations, Colleges and Universities EAP Configuration Percent of Respondents Using Virtual accounts* 83% Single-use accounts 22% Buyer-initiated payments 43% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 41, 53% of College and University respondents report EAP spending growth, 33% report no change, and 14% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 41: Type of Change in EAP Spending, Colleges and Universities, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results Colleges and Universities 56

57 Expectations for Future EAP Spending Looking forward, Exhibit 42(a) shows that 63% expect an increase in EAP spending over the next five years, while 26% expect no change. As a rationale for the expected increase, College and University respondents cite to target vendors (94%) and high-dollar transactions (47%). Exhibit 42(a): Type of Change Expected in EAP Spending, Colleges and Universities, 2015 to 2019 Exhibit 42(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively, spending is expected to increase 64% by 2019 (or an average of 12.7% per year). Exhibit 42(b): Projected Future Growth Rates for EAP Spending, Colleges and Universities Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 12% % 35% % 64% Average Annual Rate Average annual change expected over next five years 12.0% 12.7% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results Colleges and Universities 57

58 Program Management At a Glance Exhibit 43 displays a selection of program management statistics. The Exhibit shows that 97% of Colleges and Universities use plastic purchasing cards in addition to EAP. Sixty-two percent of the respondents have a payment strategy that calls for different payment methods under different conditions. College and university respondents use EAP to pay for 55% of good and 41% of service categories. The average time to full implementation for college and university EAP programs is 1.27 years. Respondents pay an average of 199 suppliers with EAP, representing (on average) 16% of their supplier base. Eighty-two percent of College and University respondents engaged in an effort to enlist suppliers for EAP acceptance, and 31% are satisfied or very satisfied with the level of supplier acceptance of EAP payment. In addition, forty-seven percent of respondents formally review and audit their EAP spending approval process, two-thirds have EAP provider insurance related to fraudulent spending, and 23% of EAP transactions (on average) are manually reconciled. Thomas Whenever an individual or business decides that success has been attained, progress stops. J. Watson 2015 Electronic Accounts Payable Benchmark Survey Results Colleges and Universities 58

59 Exhibit 43: EAP Program Management Statistics, Colleges and Universities 2015 Organizational Statistics Percent that use plastic purchasing cards 97% Percent that have a payment strategy which calls for different payment methods under different conditions 62% Spending Expansion Goods purchased with EAP* 55% Services purchased with EAP^ 41% Time to full implementation (in years) 1.27 Supplier Acceptance Number of suppliers currently paid with EAP 199 Percent of supplier base paid with EAP 16% Percent that are satisfied or very satisfied with the level of supplier acceptance for EAP payment 31% Supplier Recruitment Percent that engaged in an effort to enlist suppliers for EAP acceptance 82% Percent that changed payment terms to promote EAP acceptance (e.g., has your organization pushed check payment back from 30 to 60 days or has payment by EAP been expedited in some way). 38% Spending Reconciliation Percentage of transactions that are manually reconciled 23% Risk Management Percent that formally review and audit EAP spending approval process 47% Percent that have EAP issuer-provided insurance related to fraudulent EAP spending 67% * See description of the goods category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by Colleges and Universities. ^ See description of the services category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by Colleges and Universities. Conclusion Colleges and universities average $980,764 in EAP spending per month with an average transaction of $2,014. Monthly EAP spending per employee is currently $138. All of these benchmarks represent increases from corresponding 2012 data. The most popular EAP configuration used is virtual accounts (maintained by the buyer or supplier) with 83% of respondents utilizing this method. Eighty-two percent of College and University respondents engaged in an effort to enlist suppliers for EAP acceptance, and 31% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment Electronic Accounts Payable Benchmark Survey Results Colleges and Universities 59

60 Chapter 8 School Districts EAP Spending Norms Exhibit 44 presents current EAP spending norms for School Districts. The Exhibit shows that average monthly EAP account spending is $337,294 at the beginning of 2015, up from $179,164 at the beginning of Likewise, median monthly spending currently stands at $110,000, up from $39,932 in The average EAP transaction amount for these respondents is $3,434 in 2015, an increase from Average monthly spending per employee has increased, going from $52 in 2012 to $94 in And, average annual EAP spending as a percentage of budget has also increased from 1.33% in 2012 to 1.40% in Finally, the Exhibit shows that School District respondents currently use EAP to pay for, on average, 21% of their $2,500 or less transactions, 23% of their $2,501 to $10,000 transactions, 19% of their $10,001 to $100,000 transactions, and 8% of their $100,001 to $1 million transactions. EAP transaction capture in all spending categories (that were included in our 2012 report) has increased since Electronic Accounts Payable Benchmark Survey Results School Districts 60

61 Exhibit 44: EAP Program Statistics, School Districts, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 3,440 3,590 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $179,164 $337,294 Median monthly EAP spending $39,932 $110,000 Monthly spending per employee $52 $94 Spending per transaction $2,018 $3,434 Annual EAP spending as a percent of revenue/budget 1.33% 1.40% Percent of Transactions Paid with EAP Transactions of $2,500 or less 18% 21% Transactions between $2,501 and $10,000 20% 23% Transactions between $10,001 and $100,000 17% 19% Transactions between $100,001 and $1 Million N/A 8% Historical Trends at a Glance Exhibit 45 presents a graphic summary of the changes in School District EAP spending statistics since 2012, including overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 45: EAP Historical Trends Dashboard, School Districts, 2012 to Electronic Accounts Payable Benchmark Survey Results School Districts 61

62 Use of Different EAP Models Exhibit 46 breaks down the types of EAP models used by School Districts. The most popular option is virtual accounts (maintained by the buyer or supplier), in use by 65% of respondents, with 47% using single-use accounts as well. Exhibit 46: Use of EAP Configurations, School Districts EAP Configuration Percent of Respondents Using Virtual accounts* 65% Single-use accounts 47% Buyer-initiated payments 24% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 47, 76% of School District respondents report EAP spending growth, 12% report no change, and 12% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 47: Type of Change in EAP Spending, School Districts, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results School Districts 62

63 Expectations for Future EAP Spending Looking forward, Exhibit 48(a) shows that 62% of programs expect an increase in EAP spending over the next five years, while 29% expect no change. As a rationale for the expected increase, School Districts cite efforts to target vendors (87%) and improvements in supplier acceptance of EAP (53%). Exhibit 48(a): Type of Change Expected in EAP Spending, School Districts, 2015 to 2019 Exhibit 48(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively, spending is expected to increase 51% by 2019 (or an average of 10.2% per year). Exhibit 48(b): Projected Future Growth Rates for EAP Spending, School Districts Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 9% % 30% % 51% Average Annual Rate Average annual change expected over next five years 9.6% 10.2% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results School Districts 63

64 Program Management At a Glance Exhibit 49 displays a selection of program management statistics. The Exhibit shows that 85% of School Districts use plastic purchasing cards in addition to EAP. Thirty-one percent of the respondents have a payment strategy that calls for different payment methods under different conditions. School district respondents use EAP to pay for 59% of good and 43% of service categories. The average time to full implementation for School Districts is 1.38 years. Respondents pay an average of 144 suppliers with EAP, representing (on average) 18% of their supplier base. Eighty-three percent of school district respondents engaged in an effort to enlist suppliers for EAP acceptance, and 45% are satisfied or very satisfied with the level of supplier acceptance of EAP payment. In addition, the majority (73%) of respondents formally review and audit their EAP spending approval process, 30% have EAP provider insurance related to fraudulent spending, and 17% of EAP transactions (on average) are manually reconciled. Winston Continuous effort not strength or intelligence is the key to unlocking our potential. Churchill 2015 Electronic Accounts Payable Benchmark Survey Results School Districts 64

65 Exhibit 49: EAP Program Management Statistics, School Districts 2015 Organizational Statistics Percent that use plastic purchasing cards 85% Percent that have a payment strategy which calls for different payment methods under different conditions 31% Spending Expansion Goods purchased with EAP* 59% Services purchased with EAP^ 43% Time to full implementation (in years) 1.38 Supplier Acceptance Number of suppliers currently paid with EAP 144 Percent of supplier base paid with EAP 18% Percent that are satisfied or very satisfied with the level of supplier acceptance for EAP payment 45% Supplier Recruitment Percent that engaged in an effort to enlist suppliers for EAP acceptance 83% Percent that changed payment terms to promote EAP acceptance (e.g., has your organization pushed check payment back from 30 to 60 days or has payment by EAP been expedited in some way). 9% Spending Reconciliation Percentage of transactions that are manually reconciled 17% Risk Management Percent that formally review and audit EAP spending approval process 73% Percent that have EAP issuer-provided insurance related to fraudulent EAP spending 30% * See description of the goods category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by School Districts. ^ See description of the services category in the Footnote to Exhibit 12. The figure represents the percentage of those categories captured by School Districts. Conclusion School districts average $337,294 in EAP spending per month with an average transaction of $3,434. Monthly EAP spending per employee is currently $94. All of these benchmarks represent increases from corresponding 2012 data. Virtual accounts (65% of respondents) and single-use accounts (47%) are the most popular EAP configurations. Eighty-three percent of School Districts engaged in an effort to enlist suppliers for EAP acceptance, and 45% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment Electronic Accounts Payable Benchmark Survey Results School Districts 65

66 Chapter 9 Not-for-Profit Organizations EAP Spending Norms Exhibit 50 presents current EAP spending norms for Not-for-Profit organizations. The Exhibit shows that average monthly EAP account spending is $2.8 million at the beginning of 2015, up from $1.5 million at the beginning of Likewise, median monthly spending currently stands at $875,000, up from $453,000 in The average EAP transaction amount for these respondents is $4,327 in 2015, an increase from Average monthly spending per employee has increased, going from $261 in 2012 to $420 in And, average annual EAP spending as a percentage of budget has also increased from 1.71% in 2012 to 2.00% in Finally, the Exhibit shows that Not-for-Profit organizations currently use EAP to pay for, on average, 17% of their $2,500 or less transactions, 22% of their $2,501 to $10,000 transactions, 21% of their $10,001 to $100,000 transactions, and 7% of their $100,001 to $1 million transactions. EAP transaction capture in all spending categories (that were included in our 2012 report) has increased since Electronic Accounts Payable Benchmark Survey Results Not-for-Profit Organizations 66

67 Exhibit 50: EAP Program Statistics, Not-for-Profit Organizations, 2012 and 2015 (all numbers are averages unless otherwise noted) Organizational Statistics Number of employees 5,729 6,679 Age of program (in years) EAP Spending Metrics Average monthly EAP spending $1,497,004 $2,805,151 Median monthly EAP spending $453,000 $875,000 Monthly spending per employee $261 $420 Spending per transaction $2,049 $4,327 Annual EAP spending as a percent of revenue/budget 1.71% 2.00% Percent of Transactions Paid with EAP Transactions of $2,500 or less 14% 17% Transactions between $2,501 and $10,000 21% 22% Transactions between $10,001 and $100,000 20% 21% Transactions between $100,001 and $1 Million N/A 7% Historical Trends at a Glance Exhibit 51 presents a graphic summary of the changes in Not-for-Profit EAP spending statistics since 2012, including overall monthly EAP spending, monthly spending per employee, and the average transaction amount. Exhibit 51: EAP Historical Trends Dashboard, Not-for-Profit Organizations, 2012 to Electronic Accounts Payable Benchmark Survey Results Not-for-Profit Organizations 67

68 Use of Different EAP Models Exhibit 52 breaks down the types of EAP models used by Not-for-Profit organizations. The most popular option is virtual accounts (maintained by the buyer or supplier), in use by 66% of respondents, while 45% use single-use accounts as well. Exhibit 52: Use of EAP Configurations, Not-for-Profit Organizations EAP Configuration Percent of Respondents Using Virtual accounts* 66% Single-use accounts 45% Buyer-initiated payments 20% * Virtual accounts may be maintained by the supplier only, maintained by the buyer only, or a combination of the two. Past Growth in EAP Spending As shown in Exhibit 53, 60% of Not-for-Profit respondents report EAP spending growth, 32% report no change, and 8% report a decline in EAP spending over the past year (between 2014 and 2015). Exhibit 53: Type of Change in EAP Spending, Not-for-Profit Organizations, 2014 to 2015* * The change in EAP spending between 2014 and 2015 is based on a comparison of the respondent s current EAP spending response (given on or about the survey date of January 2015) to their response to an inquiry for average monthly spending one year ago (which chronologically would mean on or about January 2014) Electronic Accounts Payable Benchmark Survey Results Not-for-Profit Organizations 68

69 Expectations for Future EAP Spending Looking forward, Exhibit 54(a) shows that 74% of programs expect an increase in EAP spending over the next five years, while 13% expect no change. As a rationale for the expected increase, Not-for-Profit organizations cite continued efforts to target vendors (75%). Exhibit 54(a): Type of Change Expected in EAP Spending, Not-for-Profit Organizations, 2015 to 2019 Exhibit 54(b) shows the expected growth rates for EAP spending over the next five years. Cumulatively, spending is expected to increase 58% by 2019 (or an average of 11.7% per year). Exhibit 54(b): Projected Future Growth Rates for EAP Spending, Not-for-Profit Organizations Growth in EAP by Current Users Overall Growth Rate (with New Entrants to EAP Use)* Cumulative Rate Change expected from the end of 2014 to the end of % 11% % 34% % 58% Average Annual Rate Average annual change expected over next five years 11.0% 11.7% * The growth rate with new adopters is based on past relationships between growth rates with and without new adopters. We estimate that new entrants will influence EAP spend by 18% in Thereafter, the influence will decrease by 3% each year, as the number of organizations adopting EAP naturally declines Electronic Accounts Payable Benchmark Survey Results Not-for-Profit Organizations 69

70 Program Management At a Glance Exhibit 55 displays a selection of program management statistics. The Exhibit shows that 77% of Not-for-Profit organizations use plastic purchasing cards in addition to EAP. Fifty-two percent of the respondents have a payment strategy that calls for different payment methods under different conditions. Not-for-profit organizations use EAP to pay for 50% of good and 42% of service categories. The average time to full implementation for Not-for-Profit EAP programs is just under one year. Respondents pay an average of 226 suppliers with EAP, representing (on average) 18% of their supplier base. Ninety-two percent of Not-for-Profit organizations engaged in an effort to enlist suppliers for EAP acceptance, but only 19% are satisfied or very satisfied with the current level of supplier acceptance of EAP payment. In addition, the majority (64%) of respondents formally review and audit their EAP spending approval process, 50% have EAP provider insurance related to fraudulent spending, and 25% of EAP transactions (on average) are manually reconciled.. Theodore It is only through labor and painful effort, by grim energy and resolute courage that we move on to better things. Roosevelt 2015 Electronic Accounts Payable Benchmark Survey Results Not-for-Profit Organizations 70